Japanese Investor SoftBank Group Corp (SBG) Reports $1.4 billion losses from Indian Investments for 2016-17

One of the biggest Japanese investors, SoftBank Group Corp (SBG) has reported around $1.4 billion (9,000 crore rupees or 160.42 billion yen) in losses during the fiscal year of 2016-17 from its Indian investments which include the ride- hailing service Ola and e-commerce player Snapdeal. Softbank’s significant investments in India are the online marketplace Snapdeal which is run by Jasper Infotech Pvt. Ltd and the cab aggregator Ola which is operated by ANI Technologies Pvt. Ltd.

Based on the financial reports filed by the company for the fiscal year ending March 2017, the financial loss on the investments at Fair Value through Profit or Loss (FVPTL) was around ¥160, 419 million. The Masayoshi Son-led Japanese multinational telecommunications giant had reported profits of about ¥114,377 million ($1 billion) during the previous financial year of 2015-16. Apart from the poor performance of e-commerce player Snapdeal, currency fluctuations were also one of the major contributing factors for the widening of losses during the fiscal year ending March 2017. Based on the research firm Tofler, Snapdeal generated revenue of Rs. 1,457 during the fiscal year of 2015-16 and later on lost Rs. 2,960 crores. Similarly, Ola had reported revenue of Rs. 664 crores and lost Rs1, 760 crores during the same financial year.

Softbank has invested around $900 million till date in the Indian e-commerce company Snapdeal, which was considered as the major competitor for other rivals including Amazon and Flipkart. But the company lost its shine during last year and slipped to a distant 3rd place in the highly competitive e-commerce business of India. Softbank Group had already written off as much as USD 555 million in Snapdeal and Ola for the 6 months ending September 30, 2016. Softbank is currently in discussions with India’s biggest e-Commerce giant Flipkart to sell off its shares of Snapdeal and is also on the lookout for buyers for its payments arm FreeCharge. Softbank Group which currently holds a 33% stake in Snapdeal, has managed to convince the other key investors of Snapdeal including Nexus Venture Capital and Kalaari Capital. It is also planning to acquire a 20% stake in Flipkart for about $1.5 billion by buying out $1bilion worth of Flipkart shares from its US investor Tiger Global.

The New Delhi-headquartered e-commerce player Snapdeal has been having a tough time recently with dwindling sales figures and overall revenue. It also announced its plans to lay off around 30% of its workforce during February this year. The valuation of Snapdeal has dropped down from $6.5 billion in Feb 2016 to just around $1 billion this year. Similarly, Ola whose valuation was estimated to be around $5billion during 2015 has plummeted to around $3 billion during its latest fund-raise.

Softbank also wrote off around $400 million in the value of ride-hailing app Ola, its 2nd largest investment in India apart from writing off approximately $1 billion in the value of Snapdeal. Softbank has invested more than $2 billion across numerous internet ventures in India with Snapdeal and Ola being the principal investments. Besides Ola and Snapdeal, its other investments in India include OYO Rooms, online grocery delivery service Grofers and the messaging app Hike Messenger. Softbank has also invested in solar energy in India by partnering with Bharti.

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